Strong growth in tier 2 cities, the continued march of regional media and the rapidly expanding new media business helped the media and entertainment industry log a 12 per cent increase in revenues to Rs.729 billion in a troublesome 2011, according to a report by FICCI and KPMG.

Overall, the industry is expected to grow at a compounded annual growth rate (CAGR) of 15 per cent to a size of Rs.1,457 billion by 2015.

The report will be formally released at the FICCI Frames 2012 -- an entertainment and business summit of the Federation of Indian Chambers of Commerce and Industry (FICCI) starting Wednesday in Mumbai.

According to the study, the print industry grew by 8.4 percent to Rs.209 billion in 2011 -- a little below expectations as the sector started feeling the pinch of challenging macroeconomic environment and reduced advertising spends.

The overall television industry was estimated to be Rs.329 billion in 2011 and is expected to grow at a compounded annual growth rate of 17 per cent over 2011-16, to reach Rs.735 billion in 2016.

"The media and entertainment industry landscape is undergoing a significant shift. Cable digitization, promise of wireless broadband, increasing DTH penetration, digitisation of film distribution, growing internet use are all prompting strategic shifts in the way companies work," said Jehil Thakkar, head of media and entertainment, KPMG.

"Traditional business models are evolving for the better as a host of new opportunities emerge," added Thakkar.

New media businesses also saw an increased uptake largely driven by growth in internet penetration and proliferation of new age devices.

"Smart phones, tablets, PCs and gaming devices all form the foundation of a new wave in media usage.This is gradually impacting the way content is being created and distributed as well. Multiple media including TV, films, news, radio, music are being impacted with this change," said the report.

Consequently online adspend reached approximately 4 percent of total industry advertising revenue.

Animation, VFX and post production industry achieved estimated revenues of Rs.31 billion in 2011, a robust growth of 31 percent over 2010.

"Growth was achieved on back of increased contract work, higher VFX content in movies, 2D/3D conversion projects," the report said.

Owing to increase in listenership in both metros and non-metros, the radio industry grew at 15 percent in 2011 to reach Rs.11.5 billion compared to Rs.10 billion in 2010.

The out of home advertising sector was hit relatively harder by the global economic slowdown than other sectors of the advertising industry. The sector registered a year-on-year growth of 7.6 percent.

"The key industry highlights are rise in digital content consumption, launch of diverse content delivery platforms, strong consumption in Tier 2 and 3 cities, rising footprint of the players in the regional media, rapidly increasing new media business and regulatory shifts," said Rajiv Kumar, secretary general, FICCI.

The report cites implementation of recently enactment of regulations on digitisation for cable, implementation of Phase 3 and copyright for Radio and the roll out of 4G as factors that will influence the growth of the industry as a whole.

"These shifts are expected to be game changers in terms of how business is being done currently and what could be the path going forward," said the report.